Financial Planning for a Career Move: Managing Severance, RSUs, and a New NH Role

A career move often brings with it good news — and a stack of decisions you didn’t expect to make all at once: severance terms, a vesting schedule, an old 401(k), a start date, to name just a few. A single job change can compress several financial decisions, ones that would usually unfold one at a time, into just a few weeks.

For professionals across Keene, Manchester, and the Monadnock Region, that compression matters. New Hampshire’s tax treatment of income and investments can influence the best order for those decisions. As a result, Granite Staters should create a strategy that helps keep more money in their pockets come tax time.

The steps below walk through what tends to matter most during a transition, from severance terms to your old employer’s retirement plan, before you sign anything or settle into a new role.

Step 1: Understand Your Severance Terms Before You Sign

Severance financial planning starts with reading the offer closely, not just the number at the top. A lump-sum payment is generally taxable in the year you receive it and may cause a portion of your income to fall into a higher federal marginal tax bracket for that year. Salary continuation spreads the payments out and may keep your income, and your tax bracket, closer to normal.

Severance withholdings often run at a flat rate, which may not match what you will actually owe, causing a potential surprise come tax time. Health coverage deserves equal attention when reviewing your severance terms. COBRA or a marketplace plan may bridge the gap, but confirm the details rather than assuming. Confirm with your employer when coverage ends and what a coverage gap could cost before deciding.

Step 2: Plan Ahead on What to Do With RSUs and Stock Options

If equity compensation is part of your package, RSU tax planning becomes one of the more consequential pieces of the transition. Restricted stock units are generally taxed as ordinary income at vesting, based on the share value that day, regardless of whether you sell.

Vesting-day timing creates two separate issues. First, a large vesting event can push more of your income into a higher federal marginal tax bracket, especially in a year that also includes severance or a signing bonus. Second, holding too much company stock after vesting can leave your portfolio concentrated in a single employer, which potentially carries more risk than most people realize until a downturn makes it obvious.

Stock-option tax rules differ by grant type: incentive stock options and nonqualified stock options can trigger tax at different points and under different rules. After RSUs vest, the decision to sell, hold, or diversify gradually should reflect your cash-flow needs, risk tolerance, tax situation, and how much of your net worth is already tied to the company.

Step 3: Decide What Happens to Your Old Employer Plan

Your prior 401(k) does not resolve itself just because you have moved on. After a job change, your 401(k) rollover usually comes down to three paths: rolling the balance into an IRA, leaving it where it is if the old plan allows it, or rolling it into your new employer’s plan.

Each option has its own fee structure, investment lineup, and rules around required distributions later in life, and none is automatically the right answer. If a transition creates a lower-income gap year, that stretch can be a reasonable window to evaluate a partial Roth conversion. This means moving a portion of pre-tax savings into a Roth account while your taxable income is temporarily reduced. Any deferred compensation balances from your prior employer also need their own review, since payout timing and tax treatment often differ from a standard retirement plan.

Step 4: Factor In New Hampshire’s Tax Treatment

New Hampshire does not tax wages, and as of January 1, 2025, it no longer taxes interest and dividends either. For New Hampshire residents, the absence of a state tax on wages, interest, and dividends can reduce the state-tax component of severance and equity compensation decisions. However, multistate work, a recent move, employer stock-compensation sourcing rules, and prior-state residency can still create state tax considerations.

Federal tax still applies to RSU vesting, option exercises, and severance income no matter where you live. For New Hampshire professionals, much of the planning value comes from coordinating the timing of a sale, a rollover, or a Roth conversion around your federal bracket, not a state one.

Step 5: Coordinate the Whole Picture

Severance, equity, and a new role rarely stay in separate lanes. A large RSU vest can affect your Medicare or ACA subsidy eligibility if you are between jobs, a lump sum severance can affect how much you can contribute to a new plan this year, and a rollover decision can shift your available cash flow for months. Equity compensation planning works best when evaluated alongside severance timing, benefits elections, and the new role’s compensation structure, not as four separate transactions.

A pre-transition checklist worth reviewing before your last day:

• Confirm your severance structure and exact final pay date.
• Map out health coverage from your last day through your new plan’s start.
• Review your vesting schedule and any unvested equity at risk.
• Decide on a 401(k) path before old-plan deadlines apply.
• Revisit your tax bracket for the year with severance and vesting combined.

Birch Financial Group Can Build a Transition Plan for What Comes Next

No two severance packages, vesting schedules, or new offers look quite alike. As a result, financial planning after a career change rarely fits a template. The right sequence for one professional’s rollover, RSU sale, and coverage gap can look nothing like the right sequence for a neighbor going through a similar move.

Birch Financial Group works with professionals across Keene, Manchester, and the Monadnock Region to help coordinate the financial moving parts in a job change. Schedule a transition-planning session with our team today, and walk into your next role with a plan that fits the whole picture, not just the piece in front of you.